With the rise of quick payment and money transfer apps, a significant number of small-portfolio landlords have started to use them for rent collection. The only problem? Most landlords are unaware of their potential downsides before they start.

In this article, we’ll compare two quick payment methods specifically, Zelle vs CashApp, in terms of their core functionality and who their target demographics are, as well as help you understand the benefits and downsides associated with using apps like Zelle or CashApp for rent collection—and avoid the potential risks of doing so.

Key Takeaways of Using Money Transfer Apps for Rent Collection

If you don't have time to read this article, here are some of the key takeaways covered in more detail in the sections below:

In order to use a money transfer app for commercial purposes (including rent collection), you must have a business account, which is not free because there are often transaction fees and other limitations. At that point, you're paying for something with no added benefits beyond a simple money transfer.

For the amount of money that you pay in processing fees just to have a business account, you could have a full-blown property management software system to make your entire rental management life much easier — not just the rent collection side of things.

If anything, by using a P2P money transfer app that's not designed for managing rentals, you may have created an added layer of exposure to unnecessary risks (more details on that in the sections below).

Potential Risks:

  • Inability to automate invoicing or reporting of any kind.
  • Inability to automate tenant notices for rental invoices posted, due, or overdue.
  • Inability to automate grace periods, late fees, late fee invoicing, etc.
  • Inability to separate funds (income vs. liability) to different bank accounts.
  • Inability to keep legal entities financially separate & distinct (e.g., landlords with multiple LLCs).
  • Inability to automatically generate essential tax documents.
  • Inability to automatically track owner distributions, contributions, management fees, and other standard real estate transactions.
  • Potentially unable to reverse accidental payments (e.g., tenant sends money to the wrong P2P account).
  • Potential exposure of sensitive tenant information (e.g., landlord-tenant connections, monthly rental amounts, etc.).

And a whole lot more.

Instead, you can find an affordable rental management software system (like TenantCloud) that still facilitates convenient and easy rent collection while simultaneously making all the other aspects of a landlord's day-to-day routine and that of your tenant(s) that much easier — and at a reasonable cost.

Zelle vs CashApp: The Basics

Before we get into the use of P2P payment apps  (e.g., Zelle, CashApp, etc.) for rent collection, let's first break down the core differences between Zelle and CashApp:

TypeLimited bank-to-bank integrated P2P payment systemStandalone P2P payment app
User BaseBank customers in the U.S.Broad audience, including those without traditional bank accounts
AccessibilityThrough a limited selection of participating banksRequires app download
Core UseDirect bank-to-bank transfersP2P payments, financial services
Additional FeaturesLimited; mainly P2P paymentsBitcoin trading, stock investments, direct deposits, Cash Card
SpeedInstant transfers between bank accountsInstant transfers available, but fees may apply
FeesTypically no fees for personal use. Commercial accounts may have processing fees. Not all banks that integrate with Zelle allow for business accountsFees for instant deposits and credit card transfers for personal accounts, and a separate transaction fee schedule for business accounts.
SecurityBank-level security and fraud protectionEncryption, fraud protection, optional two-factor authentication
International UseU.S. bank accounts only

U.S. and UK (no international transfers between US and UK)


But, since this article is about using these P2P payment apps for commercial purposes, let's also explore the core differences between Zelle and CashApp as they relate to business accounts processing rental transactions. 

Zelle is up first:

AspectZelle for Commercial Transactions
Business UseRent transactions are commercial transactions and are only permitted with a business account. Not all banks that integrate with Zelle allow for commercial accounts.
Customer PaymentsAllows businesses to receive payments from customers.
Transaction LimitsVaries by bank; typically different from personal accounts. Each bank has its own rules and limitations for commercial transactions and transaction types. There is little to no continuity.
FeesZelle itself does not charge fees, but individual banks may have their own transaction fee schedules that apply to commercial transactions.
Security and ComplianceMust adhere to bank's security protocols and compliance requirements. Limited ability to reverse payments once funds have been sent.

And now, let's check out the commercial account details for CashApp:

AspectCashApp for Commercial Transactions
Business AccountsRent transactions are considered commercial transactions and are only permitted on a business account on CashApp.
Customer PaymentsBusinesses can receive payments from customers via $Cashtag.
Transaction LimitsHigher transaction limits for business accounts compared to personal accounts but still limited.
Fees2.75% processing fee for receiving business payments; other transactions may have different fees.
SecurityEncryption and fraud detection; optional two-factor authentication.
Additional FeaturesGenerally able to issue refunds on commercial accounts (not the free, personal money transfers), track payments, and generate payment links.

In summary, Zelle is limited to a select few banks that currently integrate with their money transfer service. Out of the limited number of banks that do integrate with Zelle, even fewer allow for business accounts. And while there is no transaction fee schedule set by Zelle, individual banks may charge processing fees on commercial transactions.

CashApp, while not limited to working with select banks, does have transaction limits, and they have a nearly 3% processing fee on all commercial transactions (including collecting rent).

Neither of these options is attractive when you consider that you can have a full-blown property management software system like TenantCloud for just $16 per month, with minimal transaction fees (as low as $1.50 per transaction), complete with all of the above-mentioned benefits and a whole lot more.

But that's not all. 

Let's continue exploring the benefits and disadvantages of quick payment apps such as Zelle or CashApp as they relate to rent collection.

Payment Technology in the Rental Industry

Humans are drawn to convenience. That is inevitable. And when it comes to managing rental properties, the easier you can make the day-to-day routine, the better.

The problem with the rental management industry is that, historically, things have been slow to change. In fact, it's an industry that has always been prone to slow adoption of new technology and has been ripe for technological disruption for quite some time now.

That includes payment technology.

Up until recently, personal checks and money orders reigned supreme in the world of rent collections; believe it or not, they're still widely used today. Many check scanners are still sitting on property managers' desks across the nation, scanning rent checks every month. Despite not having used one myself in some years, the sound of a hundred checks zipping through my check scanner each month still haunts me in my dreams to this day.

Then there are ACH (Automatic Clearing House) payments. ACH payment technology was invented in 1972, and only recently has it been adopted as a primary method for tenants to pay rent online. And already, people are tired of how long it can take for a transaction to clear.

Debit cards became available in the 1960s, and credit cards have been around since the 1950s. But the use of credit and debit for rent payments hasn't really been a thing until the past 10-15 years.

And that's where the convenience of quick payment apps comes into play. But convenience is often accompanied by risk.

The Rise of Mobile Payment Apps for Rent Collection

Enter the era of mobile payment apps. Services like Zelle, Cash App, Venmo, and PayPal have become commonplace financial transactions for everything from splitting a dinner bill to paying for services.

Despite the rental industry's slow adoption of new technology, it was different this time. With the rise of independent landlords managing just a handful of rental properties, it was only a matter of time before the rental industry as a whole began to take notice and be influenced by the hundreds of thousands of small rental operations around the country.

Landlords and property managers, particularly those managing multiple properties or with a broad, tech-savvy tenant base, have started to utilize these apps for rent collection. 

The appeal is obvious: transfers are often instant, documentation is digital, and the process is user-friendly. For tenants, the convenience of paying rent through the same app they use for other daily transactions is a significant draw.

However, this convenience also introduces significant risks—risks that can have profound consequences for both rental owners and property managers.

The Hurdles with Payment Apps in Rent Collection

As I've mentioned earlier in this article, this shift towards quick payment apps is not without its issues; some of them are more serious than others.

The largest rental demographics in the United States are largely generations who have grown up using personal computers and cell phones. At least one of the generations (Gen A) that are entering the rental market grew up with smartphones in their hands.

For those younger demographics, Zelle offers the immediacy and convenience that Gen Y, Z, and A (who have grown up in a digital world) demand. However, its integration requirements with specific banks and associated transfer limits that differ from bank to bank can pose significant challenges, particularly for properties with higher rental prices or for property managers handling multiple units.

Cash App also presents limitations, with transfer limits and fees that may not align with the traditional structure of rent collection.

The lack of a dispute resolution system within these apps is another drawback. Rental payments, unlike casual peer-to-peer transfers, require a level of formality and legal standing, particularly in the case of payment disputes or the eviction process. 

And that's not even touching on the requirements for how landlords are required by law to handle escrow funds, keep transactions between legal entities separate from each other and from personal funds, and much, much more.

Payment apps are not inherently designed with these considerations in mind, which can really muddy the waters when conflicts arise between landlords and tenants. 

These complications, or similar ones, are true of most payment apps such as Google Pay, Apple Pay, and just about every other recently launched app in the quick payments and money transfer space.

Now that you've got a general overview of the issues associated with using cash transfer apps such as Zelle and CashApp for rental collection let's get into some of the juicy stuff where the rubber really meets the road.

Transaction & Reporting Downsides For Rent Collection

When you manage rental properties, you'll need to control multiple factors that revolve around your tenant's rental payments. 

You'll quickly discover that quick payment apps are not designed to handle even a fraction of the property management industry tracking, reporting, and other financial requirements or best practices, as listed below.

Of the things they can do (from the list below), they're not done automatically - nor are they done well - and often result in a significant amount of manual work.

As a landlord, you'll need to:

  1. Automatically send notices when rent invoices are posted, due, or overdue;
  2. Track and properly store liability transactions in an escrow account, keeping them separate from income transactions;
  3. Enable payments via debit, credit, and ACH;
  4. Establish automatic grace periods on the app;
  5. Limit tenant's ability to make partial payments, especially after the invoice due date;
  6. Stop a tenant's ability to send you money once an eviction is underway;
  7. Automatically bill late fee invoices when a tenant's rent is past due (and automatically send them a notice that they've been charged a late fee);
  8. Itemize and track tenant fees and damage invoices;
  9. Track tenant deposit returns and amounts applied to outstanding balances;
  10. Send final tenant statements upon move-out;
  11. Retain the tenant's entire financial transaction history for several years, per your state or local municipality requirements.

Managing Rental Owner Transactions

And, of course, you'll need to manage financial transactions that involve owners of any third-party rentals that you manage on their behalf. You'll need to: 

  1. Track owner distributions;
  2. Track owner contributions;
  3. Track property management fees;
  4. Track property expense invoices;
  5. Create financial reports for owners, such as Property Owner Statement Reports.

Managing Third-Party Finances & Reporting

Not to mention, you'll also need to track maintenance expenses, including payments to service providers such as plumbers, electricians, handymen, contractors, etc. Or to record transactions for property equipment, parts, supplies, and other purchases related to your business. 

Categorizing those transactions can be a gigantic, laborious task if you're not using a software system with automatic categorization and reporting abilities.

Managing Financial Tax Records, Reports, & IRS Forms

Next, you'll need to compile all of that financial data and provide the proper tax documents to each person you've had over $600 in transactions for any given year.

For landlords and property managers, here are some of the types of Form 1099 that may be applicable:

  • Form 1099-K: Reports transactions made through payment processing platforms, like rent collected via apps or credit/debit cards, once they exceed $600.
  • Form 1099-NEC: Used to report payments made to non-employees, such as independent contractors hired for property maintenance, when payments exceed $600.
  • Form 1099-MISC: For miscellaneous income, which can include rent collected in cash or check form and potentially owner distribution payments to the owner of the rental property being managed by a property manager (depending on the financial arrangement between the two parties).

And as if that were not enough… there's more. Money transfer app security concerns specific to the rental industry are next.

Quick Payment Apps & Tenant Security Concerns

In property management, multiple safety concerns are connected to rental payment transactions and tenants' accounts. Let's break down a few of the more pressing concerns.

Data Privacy and Security:

  • Personal Information Protection: In the digital age, tenants provide substantial personal information during the leasing process. Property managers and landlords must ensure that this data is stored securely to prevent identity theft or privacy breaches.
  • Secure Communication Channels: When communicating sensitive information, such as lease agreements or payment details, secure channels should be used to protect against interception and unauthorized access.
  • Awareness and Education: Tenants should be educated on the risks of phishing scams and social engineering attacks and how to secure their personal networks, including payment apps.
  • Compromising Social Features: Most payment apps (including CashApp) have very public social features built into them that have the potential to compromise a tenant's safety and well-being. Tenants or landlords could unwittingly reveal home-location information, rental payment amounts, landlord-tenant connections, and other highly personal or sensitive information. Most cash transfer apps were built for simple money transfer scenarios, such as reimbursing a friend a few dollars for their portion of a bill at a restaurant, not for sending $1,500 for their monthly rent to their landlord.

Financial and Legal Implications

When using peer-to-peer (P2P) payment apps for business transactions, such as collecting rent, there are several financial and legal implications to consider. These platforms offer convenience but differ significantly from traditional payment methods in terms of legal protections and financial management.

Lack of Dispute Resolution: Traditional banking methods typically offer a process for disputing transactions. P2P apps often lack these mechanisms, making it harder to resolve unauthorized or mistaken transactions.

Business Accounts: In order to use commercial transactions on most payment apps, you're required to have a commercial account. Some of the quick payment apps limit who is eligible for a business account.

Legal Entity Limits: Even if you have a business account on a payment app such as Zelle, chances are, it does not allow you to add more than a single legal entity. For landlords who have multiple LLCs for their various rental properties, this poses a significant issue that often cannot be overcome without the use of a property management software system.

Privacy and Data Security: P2P apps collect and store sensitive personal information. The legal responsibility of protecting this information is paramount, and any breaches can have legal repercussions.

Transaction Limits and Fees:

  • Some P2P apps (or the banks they integrate with) impose limits on the amount you can send or receive, potentially complicating large transactions like rent payments.
  • Substantial credit card transaction fees on some P2P platforms may inadvertently increase costs for tenants. Those costs to do business do not come with any added benefits that are provided by software that's designed to manage rentals, which often defeats the purpose of using P2P apps for rent collection purposes.

Bank Account Limits: Most payment apps, including Zelle and CashApp, only allow you to add a single bank account to send or receive funds. This is a significant issue for handling rental income from multiple rental properties registered under different legal entities and handling security deposits legally.

Irreversible Transactions: Once a payment is sent, retrieving it in case of fraud or error can be difficult or impossible, posing a financial risk. This is particularly troublesome for rent transactions, considering they are often over $1,000 per transaction.

Reporting Income: Landlords must accurately report income received through P2P apps to the IRS. Failure to do so can lead to legal and financial penalties. Tracking rental income from more than one tenant becomes cumbersome and tedious with a quick payment app that isn't designed for tracking real estate transactions like rental income.

User Experience for Tenants and Landlords: Simplifying Rent Payments

The goal of every property manager is to find a good tenant for their rental, make it easy for them to pay rent, and make sure the rental property is generating revenue on time - every time. 

But that also has to be balanced by the laws and standards that the landlord also has to satisfy as part of their responsibilities of being a rental property manager so that they aren't spending a significant amount of time on the tedious, routine tasks that could largely be automated with a software system that's designed to do just that.

Considerations for Landlords

For a landlord that means that you need to have a way to reduce the amount of manual work you have to do each day and streamline the entire process of listing vacancies, screening tenants, moving them in, collecting rent, managing the rental maintenance, and of course - generating accurate reports for all of the above-mentioned tasks.

Given the requirement for a business account on most money transfer apps (e.g., Zelle, CashApp, and others) and the associated transaction fees that can add up to the cost of a comprehensive property management software system, it's worth considering options specifically designed to streamline all aspects of property management — not just the rent payment side of things.

Formal property management systems not only handle payments efficiently but also offer a suite of tools tailored to enhance operational efficiency, reduce administrative burdens, and provide a better overall experience for both property managers and tenants. This holistic approach to property management ultimately offers more value and convenience for both you, as the property manager, and your tenants.

Considerations for Tenants

For your tenants, you want to have a rental payment option that makes it easy for them to pay rent, submit maintenance requests and communicate with you, view their leasing information (without having to ask you every time), and access their financial history at the rental property. A quick payment app only satisfies one of those things (ease of paying rent).

Conclusion for Landlords and Tenants

Given that balancing act, it makes sense that the most logical conclusion would be to look beyond the convenience of quick payment apps such as Zelle, CashApp, or any other financial transfer system that isn't designed exclusively for property management purposes. 

You can find an affordable rental management software system that still facilitates convenient and easy rent collection (for you and your tenant) while simultaneously making all the other aspects of the day-to-day routine of a landlord and their tenant that much easier; in more ways than one - at a reasonable cost.

FAQ: Cash App vs. Zelle for Rent Collection

What are the advantages of using Cash App over Zelle?

CashApp does not require the user to have a traditional bank account, which makes it more accessible to those who do not use traditional banks. For the specific purpose of paying rent, CashApp allows users to have a Visa debit card, which they can use to pay rent on most property management software systems, including TenantCloud.

Should I use CashApp or Zelle to collect rent?

Both CashApp and Zelle require a business account to process commercial transactions such as rent payments. The processing fees they charge on business accounts negate any benefit of using either Zelle or CashApp for rent collection since they do not offer any additional benefits to a property manager or landlord beyond processing the transaction.